IRS updates FAQ related to new, previously owned and qualified commercial clean vehicle credits

[TaxmanHog]

FS-2023-04, February 2023 Note: These FAQs supersede earlier FAQs that were posted in FS-2022-42 on December 29, 2022. This Fact Sheet updates frequently asked questions related to new, previously owned and qualified commercial clean vehicle. The FAQs revisions are as follows:

• Topic A: Eligibility Rules for the New Clean Vehicle Credit: Questions 1and 8
• Topic B: Income and Price Limitations for the New Clean Vehicle Credit: Questions 2, 6, 8, 9, added new Question 7
• Topic C: When the New Requirements Apply to the New Clean Vehicle Credit: Question 7
• Topic D: Eligibility Rules for the Previously owned Clean Vehicle Credit: Question 4
• Topic G: Qualified Commercial Clean Vehicles Credit: Question 6

Link to full FAQ
https://www.irs.gov/pub/taxpros/fs-2023-04.pdf


==========================================
UPDATE for 3/31/2023
https://www.irs.gov/newsroom/irs-is...hicle-critical-mineral-and-battery-components

Link to revised FAQ
https://www.irs.gov/pub/taxpros/fs-2023-08.pdf

Fueleconomy.gov
https://fueleconomy.gov/feg/tax2023.shtml

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[TaxmanHog]

Part III – Administrative, Procedural, and Miscellaneous

Certain Definitions of Terms in Section 30D Clean Vehicle Credit Notice 2023-16

SECTION 1. PURPOSE

This notice modifies Notice 2023-1, 2023-3 I.R.B. 373, by revising the vehicle classification standard that the Department of the Treasury (Treasury Department) and the Internal Revenue Service (IRS) intend to propose in regulations under § 30D of the Internal Revenue Code (Code) for classifying vehicles as vans, sport utility vehicles, pickup trucks, and other vehicles for purposes of the clean vehicle credit (§ 30D credit).1

The rest of the notice:
https://www.irs.gov/pub/irs-drop/n-23-16.pdf

 

[jimfigler]

this is interesting

A vehicle is not a new clean vehicle if (1) another person (including a dealer) has ever purchased, registered, or titled the clean vehicle and (2) placed it in service for any purpose (including as a dealer demonstrator vehicle)

not sure if it means both 1&2 make it "not new" or if either 1 or 2 make it "not new"

 

[Grumpy2]

.

 

[RickLightning]

The word AND exists.

That means that if a dealer titles it and puts it in service as a demo, it's not new when they sell it - no tax credit.

Many states don't require titling for dealer demos.

Edit - I think this clearly rules out demos, even if not titled. I suspect that would be based off mileage, some sit in showrooms.

Edit again - Test drives by potential buyers do not disqualify a vehicle from eligibility for the new clean vehicle credit provided the dealer has not titled the vehicle to itself as a demonstrator vehicle.

 

[Zprime29]

Well crap...I was about to try and lock in a 2022 demo today for $2500 over MSRP. Would I have been able to claim if I had bought it before this update to the FAQ? This is really lame, why shouldn't a demo model qualify? I don't get the logic there.

 

[jimfigler]

The word AND exists.

That means that if a dealer titles it and puts it in service as a demo, it's not new when they sell it - no tax credit.

Many states don't require titling for dealer demos.

Edit - I think this clearly rules out demos, even if not titled. I suspect that would be based off mileage, some sit in showrooms.

Edit again - Test drives by potential buyers do not disqualify a vehicle from eligibility for the new clean vehicle credit provided the dealer has not titled the vehicle to itself as a demonstrator vehicle.

Just curious, why did you revise your thought? I initially read it as you first thought.

 

[RickLightning]

Just curious, why did you revise your thought? I initially read it as you first thought.

Because I found the last sentence where they gave an example:

Test drives by potential buyers do not disqualify a vehicle from eligibility for the new clean vehicle credit provided the dealer has not titled the vehicle to itself as a demonstrator vehicle.

 

[jimfigler]

Because I found the last sentence where they gave an example:

Test drives by potential buyers do not disqualify a vehicle from eligibility for the new clean vehicle credit provided the dealer has not titled the vehicle to itself as a demonstrator vehicle.

So all demo vehicles are title to the dealers as demos?

 

[Zprime29]

So all demo vehicles are title to the dealers as demos?

I'm going to ask the dealers I've been working with. There's two that have 2022 I want, one is willing to do $2500 over and I'm waiting to see what the other can do. This could be a really annoying wrinkle in my quest for a good deal.

 

[RickLightning]

So all demo vehicles are title to the dealers as demos?

No. If the state doesn't require it, most would not title it.

 

[Texas Dan]

You know this really doesn’t seem fair. If you buy a Cadillac Lyric, which has to be classified as a luxury car, then you qualify for the tax credit but if you buy a F150L because you really need a truck and you get the extended range battery because you really need the extra range, then the government penalizes you by not giving you the tax credit. Considering how much more benefit to the environment an EV truck provides compared to a luxury car, I think the incentives are not distributed correctly.

I think there should be some kind of adjustment for Combined Gross Vehicle Weight Rating or something like that. Since the the current tax rules are going to significantly impact the sales of longer range trucks, I think all the truck manufacturers need lobby congress to make more adjustments to the rules. I didn’t buy a F150L because I wanted a luxury vehicle, I bought it because I needed a long range EV truck and I don’t like being penalized because I bought what I needed.

I am not going to cry too much because I expected the tax credit for Ford to run out before I took delivery of my F150L but to be so close and to have the tax credit just out of my reach is really frustrating.

 

[Zprime29]

Can confirm what @RickLightning said. The dealer here in AZ said it has not been titled and I would be the first person to register it. Sweet...someone's about to get a new truck.

 

[luebri]

You know this really doesn’t seem fair. If you buy a Cadillac Lyric, which has to be classified as a luxury car, then you qualify for the tax credit but if you buy a F150L because you really need a truck and you get the extended range battery because you really need the extra range, then the government penalizes you by not giving you the tax credit. Considering how much more benefit to the environment an EV truck provides compared to a luxury car, I think the incentives are not distributed correctly.

I think there should be some kind of adjustment for Combined Gross Vehicle Weight Rating or something like that. Since the the current tax rules are going to significantly impact the sales of longer range trucks, I think all the truck manufacturers need lobby congress to make more adjustments to the rules. I didn’t buy a F150L because I wanted a luxury vehicle, I bought it because I needed a long range EV truck and I don’t like being penalized because I bought what I needed.

I am not going to cry too much because I expected the tax credit for Ford to run out before I took delivery of my F150L but to be so close and to have the tax credit just out of my reach is really frustrating.

Your point is valid but I have a better idea yet.

No price limits at all or no EV credits at all.
Gov't needs to keep their thumb off the scale and stop picking winners and losers.

 

[TaxmanHog]

Word on the street is that more information is coming next week, probably a Friday afternoon drop on 3/31

Keep an eye here News Releases for official guidance.

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